Equipment Dealers Coverage Form and the Other Insurance Clause

The other insurance clause on the commercial inland marine conditions form states the following: if there is other insurance covering the same loss or damage, the insurer will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether the named insured can collect on it or not. This clause has caused a problem for our insured who has coverage under an equipment dealers coverage form.

Our insured was returning to its owner a piece of construction equipment that had been left with the insured for servicing. The lowboy trailer on which the equipment was being hauled tipped over and the equipment fell to the ground, sustaining about $30,000 worth of damage. When the insured submitted a claim, the insurer denied coverage, contending that the other insurance clause makes our insured's policy excess over the coverage that the owner of the equipment has from his own inland marine policy. And the insurer even said the other insurance clause would prevent coverage in the event of a subrogation claim against our insured by the equipment owner's insurer. What is your opinion of this? It seems to us that if the insurer is right, it makes a huge part of the equipment dealers coverage non-existent.